This is an update from our article of July 20, 2015
CAR announced on its website that the Division of Insurance has approved Fireman’s Fund Insurance Companies official withdrawal from the Massachusetts private passenger automobile insurance market. The order was approved on August 27, 2015 pursuant to Rule 38 of the CAR Rules of Operations.
The move is part of its sale to the ACE American Insurance Company and its affiliates
In July, the Division of Insurance notified CAR that the Fireman’s Fund Insurance Companies (“Fireman’s Fund”) had formally requested to withdraw from the Massachusetts private passenger automobile insurance market. Commissioner of Insurance Daniel Judson notified CAR of Fireman’s Funds Withdrawal Plans in a formal letter to CAR’s Acting President, Natalie Hubley, on July 16, 2015. In response, CAR announced the withdrawal request by issuing Bulletin No. 1003 on July 16, 2015.
In Bulletin 1003, CAR noted that the withdrawal request submitted pursuant to Rule 38.B of the CAR Rules of Operation, permits “…the Governing Committee of CAR, any member company of CAR or any association of producers may request a hearing at the Division to consider the effect of this withdrawal on the orderly and equitable conduct and operation of the Massachusetts motor vehicle insurance market.” The request, however, must be filed with the Division of Insurance within 10 days of notice by the Division to CAR of the opportunity for a hearing.”
In a formal letter to the Division of Insurance, Fireman’s Fund explained that its withdrawal includes all its subsidiaries operating within the Commonwealth, including American Automobile Insurance Company, The American Insurance Company, Associated Insurance Company, Associated Indemnity Company and the National Surety Corporation and will include the insurer’s withdrawal from the Massachusetts Automobile Insurance Plan (MAIP).
Fireman’s Fund further advised that the withdrawal is part of the company’s agreement with ACE American Insurance Company and its affiliates under which ACE will acquire the renewal rights to Fireman’s Fund’s personal insurance business. Fireman’s Fund has ceased writing any new voluntary Massachusetts private passenger automobile insurance since April 2015. It has continued, however, to write commercial lines, including commercial auto.
ACE will assume Fireman’s Fund’s responsibilities upon its officially withdrawal from the MAIP
According to the agreement between the ACE and Fireman’s Fund, Fireman’s Fund has agreed to transfer all of its private passenger responsibilities and obligations as an Assigned Risk Company, including any new assignment activity, to ACE. ACE currently writes its Mass. auto insurance business through Bankers Standard Insurance Company while also maintaining a LAD agreement with Pilgrim Insurance Co. for its private passenger residual market responsibilities.
As a result, Fireman’s Fund says that it will be non-renewing all of its current in-force MAIP assignments. ACE will simultaneously make an offer to insure via its agreement with Pilgrim insurance for the remainder of Fireman’s Fund’s three-year obligation to these insureds under the CAR Rules. The company says that ACE will also reinsure Fireman’s Fund’s responsibilities and share of expenses to the MAIP, including Fireman’s Fund’s obligations to the previous Massachusetts private passenger residual market until they close.
Other particulars regarding Fireman’s Fund’s withdrawal from the Mass. private passenger auto marketplace
The following are a few other particulars from Fireman’s Fund’s official notice of withdrawal from the state. As part of the Fireman’s Fund-ACE Agreement, ACE will offer coverage to 90 percent of Fireman’s Fund’s existing policyholders nationwide. The offer of coverage will include ACE’s own form and rates, however, and Fireman’s Fund policyholders will not be required to move to ACE.
As for Fireman’s Fund employees working in Massachusetts, since the company had a relatively small presence within the Commonwealth, there will not be many job losses. Prior to its agreement with ACE, Fireman’s Fund only had 11 employees working in Massachusetts. Of those 11, five employees have been retained to help Fireman’s Fund with its commercial lines business in Massachusetts. Of the remaining six employees, four employees were hired by ACE with the remaining two employees having been terminated from their positions effective this month.
As for Agents and Policyholders, Fireman’s Fund says that most of its independent insurance agents have already been appointed by ACE. At the time of the notice, Fireman’s Fund says that of its 71 agent who were appointed for personal lines with the insurer within the Commonwealth, 63 have already been appointed with ACE. Seven agents remain in the process of being appointed to ACE or have opted not to receive an appointment, while only one agent was not solicited at all for an appointment with ACE.
As for policyholder numbers, Fireman’s Fund says that since its Massachusetts private passenger automobile insurance has been relatively small, its withdrawal will cause little to no disruption within the marketplace. As of May 2015, Fireman’s Fund has 1,943 personal automobile insurance policies and 3,583 homeowners policies in force.